Sunday, March 22, 2009

Markets ended with gains for second consecutive week. It was the week where individual stocks got more attention than the markets. More than one fourth of the stocks traded in F&O segment ended the week with more than 10% gain. Technology, Aviation, Metals, Realty, Infra and Pharma were the sectors, which witnessed positive momentum whereas Cement, Auto and PSU banks and oil marketing stocks were showing relative weakness. DLF, Hindalco, Sterlite, Suzlon, HCL Tech, Nalco, Sail, Rcom and Zee were the top gainers. L&T, BPCL, ACC, Cipla and Unitech remained the top Nifty losers.

We might see our markets open with an upside gap due to strong Asian markets and may retrace from the highs. Utilize these opportunities to exit the markets. Nifty might face stiff resistance between 2860- 2900. We might see the month of April bringing a whole lot of negative surprises on the elections and results front hence we view this as the right opportunity for short and medium term traders to initiate and hold on to the short positions. One must progressively short Metals, Auto and Cement stocks since they are the ones, which outperformed the overall markets due to some positive news flow. I expect these sectors to lead the next leg of correction. Initiate short positions at higher levels and hold the positions for the coming 2 months.

Sunday, March 15, 2009

Both the major indices rallied sharply on the last trading session taking cues from global markets. Auto, Banking, Technology and Cement stocks participated in the rally. PSU oil marketing stocks were particularly weak as per our prediction last week. Tata Motors, ICICI Bank, Sterlite, HDFC, Nalco, Tata Communications, Reliance and RPL were among the major Nifty gainers. HPCL, BPCL, Bharti, IOC and Zee were the major losers.

We might see a positive opening on Monday on back of a buoyant Friday close and there may be some follow up buying. But these rises are not likely to sustain. Technically major resistance for Nifty comes around 2800. Short traders must wait for opportunities to sell anywhere around this level. Be stock specific and trade short at higher levels. Fundamentally we don’t see any major reason for a sustained rally. There are some positive indications on the auto sales and cement dispatch figures. We feel that these numbers do not reflect the true picture due to extraneous reasons like election fever and the govt schemes running on fast track. But this myopia is likely to evaporate in 1-2 months. Aptech, Moser Baer, Yes Bank, IDFC, Hotel Leela, Canara Bank, Bharti and Idea may try to test lower levels in the coming week. One can trade short in these stocks with adequate stoplosses. Avoid long positions.

Sunday, March 8, 2009

Though it was a surprise, technically the pull back had to happen after such a steep cut. As time passes, it is becoming increasingly difficult for the markets to sustain a pull back. I am afraid we might see a time, not in the very distant future, when even pull backs as vigorous as this would be hard to come by. Any rise like this should be utilized to sell into irrespective of the valuations. We see no reason for the markets even to stabilize at this juncture, let alone a rally. Let all traders accept this reality and continue moving out of the markets and creating short positions. At levels that we are going to witness a few quarters from now, we might not dare to sell. Make the most of these relatively good times and SELL.

Sunday, March 1, 2009

Markets managed to end the week in green despite weakness in global markets. Auto stocks lead the pull back. M&M, Tata Motors and Maruti were the top gainers in Nifty. Infosys, ONGC, Tata Communication, NTPC and BHEL were among the other gainers. Ranbaxy was the worst loser losing over a fifth of its market cap in the week. ABB, ACC, PNB, HDFC, SAIL and Zee were the other losers.

Most of the global markets breached October lows and drifted much lower. The outperformance of our markets is not likely to last for long given the bleak global outlook. Asian markets are trading weak and we should expect a gap down opening and the cuts may get much deeper during the course of the week. 2660-2680 is the strong support for Nifty and if it manages to breach this level, the next support comes only at 2520, the RIL-RPL merger not withstanding. Sell at the opening and hold on to short positions.